Two years after he sensationally claimed turncoat MP Peter Slipper had subjected him to months of sexual harassment when he worked as a media adviser in the then-Speaker's office, James Ashby has given up on his claim for damages.

After more than two years of legal wrangling, including his case being thrown out of court as an abuse of process before an appeal declared it should be heard, Mr Ashby has dropped his suit less than a fortnight before the trial was to start.

The former political staffer said the high-profile legal action has been "intense and emotionally draining" and after "deep reﬂection and consultation" he had decided not to proceed.

Damages claim dropped: Peter Slipper. Photo: Andrew Meares

The decision is in sharp contrast to Mr Ashby's vow immediately following the appeal judgment in February this year to continue to pursue his claim for damages for the ''offence, humiliation, distress, anxiety and stress … and dislocation to life'' resulting from the alleged ''unwelcome sexual advances, unwelcome sexual comments and unwelcome suggestions of a sexual nature''.

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In a statement on Wednesday, Mr Ashby cited a number a reasons for seeking leave of the Federal Court to discontinue the case including that the federal government's decision to fund Mr Slipper's legal fees put him at a disadvantage.

Mr Ashby and Mr Slipper had spent four days in confidential mediation – the second attempt to resolve the claim outside the courtroom since the case began – but a resolution wasn't reached by the end of the session on Tuesday.

Mr Ashby said although his lawyers, Harmers Workplace Lawyers, had agreed to absorb the $1 million he has incurred in legal fees to date, and had promised to continue working pro bono, he was up against an opponent who had virtually unlimited funding.

"Confirmation by the Minister of State, Michael Ronaldson, that Mr Slipper will continue to have taxpayer support for an unknown “quantum” in funding makes this case financially very one-sided," the statement said.

"This gross imbalance in funding makes it unpredictable how long this case may run, and more importantly, cost.

"If I succeed against Mr Slipper, that win may result in another appeal which will only prolong closure for me, and increase costs. This type of ‘deep pocket’ litigation, where one side has unlimited money, from the taxpayers, makes it fundamentally unfair for an ordinary person seeking justice."

Mr Ashby said another factor in his decision not to proceed was his victory in an appeal court in February this year, which overturned a decision to throw out his case on the grounds it was an abuse of process.

Federal Court Justice Steven Rares had declared the case to be a political attack against Mr Slipper but in a two-to-one decision, the full bench of the Federal Court found Justice Rares made several adverse inferences and findings against Mr Ashby and his lawyer, Michael Harmer, which were speculative or contrary to their unchallenged sworn evidence.

Mr Ashby said the appeal court's decision went some way towards satisfying his initial reason for pursuing the case. That judgment made "significant findings in my favour regarding some of the most vital aspects of my claims. Fundamentally, that the harassment had in fact occurred.

"One of the key reasons I started this action was to stop Peter Slipper’s behaviour. I am confident this has been achieved."

Further, the allegations concerning Mr Slipper's misuse of taxpayer-funded travel entitlements, known as the Cabcharge allegations, are being dealt with in the criminal court, he said. Mr Ashby also said he didn't want to cause Mr Slipper further harm given reports he is mentally ill.

Mr Slipper has received treatment in a Queensland rehabilitation facility in recent months.

The statement said the federal government had spent $700,000 on legal fees on top of Mr Slipper's costs. Mr Ashby initially sued the Commonwealth, as his ultimate employer, and accepted a $50,000 settlement.

In a statement released last night, Mr Slipper said: ''Any suggestion by Mr Ashby that the Full Court of the Federal Court found that the allegations of harassment had occurred is wholly incorrect. The Full Court decision meant that Mr Ashby could bring his allegations before the court to be tested, something which he has now declined to do. I am pleased to be so completely and publicly vindicated.''